Correlation Between American Express and 775371AU1

Can any of the company-specific risk be diversified away by investing in both American Express and 775371AU1 at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Express and 775371AU1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Express and ROHM HAAS 785, you can compare the effects of market volatilities on American Express and 775371AU1 and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Express with a short position of 775371AU1. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and 775371AU1.

Diversification Opportunities for American Express and 775371AU1

0.23

Correlation Coefficient

American Express  775371AU1

Modest diversification

The 3 months correlation between American and 775371AU1 is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding American Express and ROHM HAAS 785 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROHM HAAS 785 and American Express is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Express are associated (or correlated) with 775371AU1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROHM HAAS 785 has no effect on the direction of American Express i.e., American Express and 775371AU1 go up and down completely randomly.

Pair Corralation between American Express and 775371AU1

Considering the 90-day investment horizon American Express is expected to under-perform the 775371AU1. In addition to that, American Express is 4.39 times more volatile than ROHM HAAS 785. It trades about -0.07 of its total potential returns per unit of risk. ROHM HAAS 785 is currently generating about 0.05 per unit of volatility. If you would invest  11,016  in ROHM HAAS 785 on December 26, 2024 and sell it today you would earn a total of  51.00  from holding ROHM HAAS 785 or generate 0.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	41.67%
Values	Daily Returns

American Express  vs.  ROHM HAAS 785

American Express

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

ROHM HAAS 785

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ROHM HAAS 785 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 775371AU1 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Express and 775371AU1

The main advantage of trading using opposite American Express and 775371AU1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, 775371AU1 can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in 775371AU1 will offset losses from the drop in 775371AU1's long position.

The idea behind American Express and ROHM HAAS 785 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.